What kind of return on investment are businesses getting on social media platforms?

Kate Arends, Maria Vizueto and Betsey Kershaw

As you browse the videos on Maria Vizuete’s YouTube page, you’ll see each features an immaculately styled woman sharing her favorite choices of heels, the best way to buy a designer belt, and makeup tips.

Among those videos is a two-minute clip where Vizuete discusses a fragrance sample pack that can be traded in for a full bottle and how it would make an excellent choice for a Mother’s Day gift. But there’s something different about this video.

It’s labeled as an ad and paid for by Sephora, a nationwide beauty megastore.

Vizuete isn’t a saleswoman for Sephora, nor is she employed by the business in any capacity. She is what’s often called an influencer—a person with a large social media following who acts as a subject-matter or product expert in a particular niche, who can “influence” their audience. In Vizuete’s case, she’s known for her fashion and beauty advice.

A majority of Americans under the age of 50 regularly use social media platforms such as Facebook, YouTube, Instagram, and Snapchat, and nearly half use Twitter, according to a 2018 report by the Pew Research Center. So it’s no surprise that brands are partnering with popular users like Vizuete, with her hundreds of thousands of followers, to get in front of potential consumers.

Anyone who has used social media in the last half-decade is well acquainted with its role as a marketing platform, from the banal (hypertargeted ads interspersed in news feeds) to the bizarre (brands using social media to “troll” consumers or other brands to get attention). You’d be hard-pressed to find a major company that isn’t using social media to capture consumer attention in some fashion. While not every brand goes the influencer route, marketing dollars are clearly being poured into digital channels. And while marketers clearly see a value in these platforms, it’s yet to be determined just how much of a boost they provide.

Welcome to the new social media frontier.

Same marketing, different platform

Social media marketing is a relatively new subfield; the medium is what distinguishes it from older forms of marketing. Marketing website Search Engine Land defines it as “the process of gaining traffic or attention through social media sites.”

The modern web offers marketers something other channels cannot: data points on individual users. People readily give their personal information to social media websites and then share and interact with content that provides these sites additional context to use. The digital activity allows companies to build sophisticated profiles of Internet users.

Marketers have pounced. In 2018, spending on social media advertising is expected to hit $51.3 billion, according to a report by social media sharing tool Hootsuite. A typical marketing budget currently allocates just under 10 percent of its resources on social media, but over the next five years that number is expected to double.

Brand-building via social media

Social media dollars aren’t just directed at online ad buys. They also go toward salaries of internal employees whose jobs focus solely on social media or to hire outside agencies to do social media work for companies.

Red Wing Shoe Co., which has a storied history, is a strong social media case study. The 113-year-old brand is still based in Red Wing, Minnesota. For much of its history, Red Wing boots were known as reliable and sturdy footwear for working men and women.

But walk through the North Loop in Minneapolis—or hip neighborhoods in just about any city in colder months—and you’ll see flannel-clad 20-somethings sporting a pair of Red Wing boots from the Heritage line. At least some of the credit for that reality is owed to social media.

Red Wing has more than a half-million followers between two of its Instagram accounts and thousands more on other channels. Scroll through its @RedWingHeritage account and you’ll see pictures of young fashion-conscious people having fun—riding motorcycles or playing with a dog or playing guitar.

It’s a strategy that runs 365 days of the year, meant to engage consumers, build brand loyalty, and, yes, get footwear off shelves.

But don’t call it sales.

“Honestly, we aren’t in the selling game,” Kershaw says. “Most of our clients already understand the value of social, because they consistently see results and understand how important it is to reach new customers this way, especially younger audiences.”

While she declined to provide specifics, she says they’ve seen “industry-breaking results” from their social media work.

But should every brand be using social media? Kershaw says yes. “We think a strong social presence is the cost of doing business, and people are just as likely to check out a brand’s social channels as they are a website.” But she warns against a haphazard approach. “It requires a dedicated team and a willingness to start from scratch and do a lot of testing to see what works,” she says.

The rise of the influencer

Maria Vizuete proudly calls herself a full-time blogger and digital influencer, but it isn’t what she has always done for work. She spent nearly a decade of her life at Piper Jaffray, mainly doing research on the fashion, beauty, and home retailing sectors. While working at her corporate gig and living in Los Angeles, she launched her blog Mia Mia Mine. It’s named after a nickname she had as a child, and it chronicles the outfits she wears on a particular day. A graduate of the University of Minnesota, Vizuete now lives in Woodbury.

Although the blog attracted followers, she didn’t think of it as anything other than a hobby at first. However, a few years later, she heard about bloggers who were making millions of dollars through affiliate links—unique URLs that direct shoppers to product pages, show advertisers the source of the link, and pay the person who provided it.

“I realized that I could carve out my own niche if I had the time to dedicate to it,” Vizuete says. “So I made the leap from stock analyst to blogger officially on Jan. 1, 2016, and I haven’t looked back.”

Thus Vizuete entered the world of influencer marketing. Think of it as the celebrity endorsement for the digital era: Influencers typically use their large social media followings in a particular niche to provide advertisers access to that audience. Money is earned through company-sponsored ads or affiliate links.

Scroll through Mia Mia Mine and you’ll find style expertise and how-tos (“My Guide to Buying a Gucci Belt” and “How to Care for Designer Shoes and Bags” are just two of the posts you can read on the website), with sponsored content blended seamlessly throughout. The content is being served to her large blog following and more than 573,000 Instagram followers who visit for trusted advice on fashion, beauty, and lifestyle topics.

“My goal is to inspire and educate my readers on the latest trends in the fashion, beauty, and home spaces. Everyone kind of has their own niche, but I focus on elevating everyday style,” she says. “I often think of myself as a personal stylist to my audience—sharing everything from what to wear to where to travel.”

Brands know that followers trust a recommendation from influencers like Vizuete; it’s this trust they’re buying access to. But this means that influencers walk a fine line between promoting products to keep the lights on and preserving the trust they’ve built up.

“Maintaining a sense of authenticity and only recommending products that I truly believe in is imperative to maintain trust with my audience,” Vizuete says.

User-generated content

Sometimes the key to authenticity on social media is handing over the reins to the actual consumers.

That’s what frozen-treat maker JonnyPops does. While the St. Louis Park-based company has a marketing team that runs social media operations, it often asks fans to submit their own pictures eating its products on Instagram or other platforms. They encourage fans by offering contests where a poster could end up with a coupon for a free box of pops.

JonnyPops also has built a large-scale word-of-mouth program that it calls the Pop Squad. While the company does pay some influencers it considers part of the Pop Squad, the program is open to anyone who’s interested. JonnyPops sends program members information about the company and coupons for products, asking two things in return: honest feedback and that they’ll share their thoughts with friends.

The marketing efforts seem to be working: In 2011, the company was a small operation among a few friends at St. Olaf College. Today, JonnyPops has nationwide distribution and its Pop Squad has a reach of over 2 million people. Store sales began in late 2014.

Leveraging social media

Perhaps nobody in the Twin Cities has better harnessed the power of social media to build their own fledgling empire than Kate Arends, better known online as Wit & Delight.

Arends launched Wit & Delight in 2008, a few years after graduating from college as a graphic designer and right as the recession was hitting. She started the business as a way to showcase her work, earn money on the side, and write about “being a creative young person living on a budget—really anything I was thinking about,” she says. With that simple premise, she built a growing community across her blog, Instagram, and Pinterest.

Like Vizuete, Arends didn’t launch her website with the idea of being an influencer. In fact, she didn’t do any brand partnerships for the first four years of Wit & Delight. But with a large following, advertisers have flocked to her.

The brand today carefully screens those seeking to be featured on the website or social channels, Arends says. That means asking: Is it well designed? Is it forward-thinking? Does it add value? Is it scrappy?

Once it’s been approved, the organization sits down with the advertiser and has a frank talk about expectations. That translates into what Wit & Delight will and won’t do (it won’t use marketing gibberish to gush about a product in an inauthentic way) and what metrics for success look like.

Important in maintaining trust with followers is being willing to say no to specific requests or turn down the offer when the brand doesn’t fit. “We’ve walked away from tens of thousands of dollars because something didn’t feel right,” Arends says.

That authenticity has attracted big business names, including Target. In 2014, the retailer launched a limited-run Wit & Delight product line.

Since then, Wit & Delight worked with Target on luggage products, a technology program and a pet program

. Today, Wit & Delight is a powerhouse, reaching 3.3 million people. It calls itself “a lifestyle brand that indulges in the lighter side of life through products, prose, and visual stories by embracing the highs, lows, and curiosity of the human condition.” It mixes editorial with paid product recommendations, and it now includes a design studio for like-minded companies.

Arends says that today about 60 percent of income comes from sponsored content, with the remaining 40 percent coming from products. Her goal is to shift that mix until about 80 percent of income comes from products.

Is it worth it?

There’s a famous quote by John Wanamaker, a 19th-century American businessman: “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” It speaks to the uncertainty of how effective marketing dollars actually are. Social media is no different.

Despite that reality, companies are increasing their budgets to reach consumers through digital channels. Figuring out the actual return on investment is trickier, and each influencer or brand has its own way to measure it.

“It can be hard to actually tie a purchase at a store to a Facebook post someone saw,” says JonnyPops’ Turner. But her team combs through Pop Squad social media posts and often sees people asking where they can buy the treats. And much of its marketing effort during the launch in Sam’s Club stores was digital, where JonnyPops “did great the first few weekends,” she says.

She noted that tracking tools let you monitor conversions in ways that traditional media do not, and influencers provide the benefit of knowing the buying habits and psychology of their audiences.

“I’m always shocked at the power of an influencer’s reach,” she says. “It’s not uncommon for an influencer to drive tens of thousands and even hundreds of thousands of dollars in sales to a specific retailer from just one campaign.”

Meanwhile, Wit & Delight’s Arends says that, while knowing your ROI is great, it’s most important to remember social media’s power to build one-on-one relationships with a brand’s most loyal fans.

“Social media is so powerful when you’re talking to your niche,” Arends explains. “When you partner with the right people linked to your core customer, the goals become clearer and more manageable.”

Actually measuring ROI still requires that a company has clear goals in place. “You need to make sure you have a strategy to get there,” she says. “Social media and influencers are not a quick-fix secret weapon to success.”

Social Media Stars

Kate Arendsaka: Wit & Delight, a lifestyle blog and design studio.

Claim to fame: W&D launched a collaboration with Target in September 2014 and has done several more since.

A brand she thinks is killing it on social media: Women’s fashion company Everlane. “They put their brand values at the center of everything that they do,” including how they use social media.

Best advice for brands on social media: “Stay on your toes and get ready to change your strategy at a moment’s notice. … There will always be new channels and new ways to engage, and you have to be comfortable with testing until you see results.”

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